Two major Australian institutional investors are among the world's most responsible asset allocators, according to a new report.
AustralianSuper and Victoria Funds Management Corporation were recognised for their commitment to responsible long-term investing, ranking in the top 25 of the world's most responsible asset allocators, according to US public policy think tank, New America.
In partnership with the Fletcher School at Tufts University in Massachusetts, New America's Responsible Asset Allocator Initiative (RAAI) analysed and rated around 200 sovereign wealth funds and public pension funds against 10 core principles and 20 criteria for responsible investing practices, including disclosure practices and the integration of ESG into investment decisions.
AustralianSuper and VFMC ranked within the top quintile of analysed funds, while Commonwealth Superannuation Corporation, HESTA, QIC and QSuper were named finalists.
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The difference between leaders and winners, New America said, was narrow: leaders averaged 96 points from a possible 100 , while finalists scored an average of 89 points.
RAAI's previous ranking of responsible asset allocators saw AustralianSuper and VFMC recognised as finalists - however the two managed to improve, breaking into the top 25 alongside the likes of CalSTERS, and Japan's Government Pension Investment Fund.
However, New America said the funds could not rest on their laurels, pointing out significant areas of improvement remain, such as investing in frontier markets and following responsible investing practices while doing so.
"The leaders and finalists, with average scores of 60% and 48%respectively, could do much better," New America said.
New America called out leaders and finalists collectively, noting not all had downloadable reports with details of their responsible investing practices.
"We expect nothing less than 100% on this criteria going forward," the think tank said.